Global Cannabis Index up 6% this Week
Marijuana stocks were up strongly this week driven by solid gains in the general stock market and a risk-on attitude among investors. Aurora Cannabis completed the merger of CanniMed Therapeutics without lowering the deal terms which had been an ongoing worry for the market and likely contributed to the positive sentiment this week.
WEEKLY PERFORMANCE OF THE TOP 75 GLOBAL MARIJUANA COMPANIES
Canopy Growth Listing Soon on Nasdaq
News started filtering around on March 1st last week that Canopy was looking to list on the NASDAQ. Cronos Group, another legal producer, is up 41% since listing on the NASDAQ February 26th. A US listing for Canopy will likely bring in new buyers and a share price pop, but with the industry fundamentals looking challenged and valuations still rich, we expect any share price strength will be short lived.
and looking to buy into Spain…
Reports surfaced this week that Canopy Growth is submitting a final bid to acquire Alcaliber of Spain. Alcaliber grows poppies for morphine and grows marijuana that is turned into pharmaceutical material for approved patients. Spain currently outlaws commercial imports and sale of marijuana, but growing for personal use is allowed. Canopy is likely using this deal to enter the Spanish market and wants to be prepared to sell domestically when commercial cultivation is eventually legalized.
Retail Prices Continue to Fall in the United States
According to Cannabis Benchmarks, a well-known price reporting agency, legal marijuana prices fell 13% in 2017 across the United States. Price declines were the worst for Colorado, the most mature market, followed by Oregon where surging supply is finally alleviating a year-long legal shortage.
According to the report, marijuana is showing the same seasonal pricing pressures as other crops, which should be a concerning comment for any investors who are betting that branding and introduction of new products in Canada will keep retail prices high even as growing costs fall and supply surges.
SPOT PRICES FOR LEGAL US STATES
Israel’s Medivie signs a 50,000 kg export deal for $110m with a private investor
The deal is contingent on Israel legalizing marijuana exports, which Medivie expects to happen in the next two years. Medivie will build a greenhouse with the money that can produce 100,000+ kg a year, or 7 times more than the medical market in Israel will need in the next few years.
Impact on Canada – Production from this deal directly competes with marijuana exported from Canada. Expect to hear about more export deals in Europe, Australia, and South America in the months ahead.
German Doctors Still Not Prescribing Medical Marijuana
According to the German hemp association, doctors still are very reluctant to prescribe medical marijuana for fear of damaging their reputations and due to the complicated approval process from medical insurers. Demand among medical patients is growing rapidly in Germany with 13,000 applications for reimbursement in 2017, but there is still an acute shortage of supply for the average German.
The German agency overseeing marijuana licensing is now in the final stages of choosing producers to supply homegrown flower, however only 6,600 kg can be grown legally over a period of four years.
Impact on Canada – At the rate Germany is going there will continue to be a severe lack of homegrown supply, which could mean substantial demand for imported marijuana from Canada. Slow acceptance from doctors could prevent consumer demand from growing too rapidly, so Canadian producers will have to focus on doctor and patient outreach like they have in Canada, to ensure rising levels of acceptance for medical marijuana.
READ THE MARIJUANA EXPORT MIRAGE FOR AN IN DEPTH REPORT ON THE STATE OF DEMAND FOR MEDICAL MARIJUANA OUTSIDE OF CANADA